- Piper Sandler analyst Clarke Jeffries maintained a Buy rating on Shift4 Payments Inc FOUR and set a price target of $85.00.
- The analyst believes Shift4 is well positioned for solid results through 2023 and poised to show elite growth over the medium term (>2x top line over three years) while still producing margin expansion.
- He sees the growth driven by continued execution across three growth strategies of the end-to-end processing initiative across gateway volumes, new verticals outside the high-growth core, and international expansion. These strategies present company-specific drivers for fundamentals based on gaining market share, growing economics with existing customers, and entering new markets.
- The gateway sunset initiative, announced in 2022, is a multiyear effort to convert the company's heritage gateway business ($150 billion+ volume) to its end-to-end processing solution ($70 billion+); this consolidates four or five different vendors down to one and lowers the cost for merchants.
- In 2020, Shift4 had roughly 90% of the company's payment volumes from restaurant & hotel customers. Today that number is closer to ~50%, with the company less than two years into the expansion into five new verticals: travel, sports, non-profits, gaming, & 'sexy tech.'
- New verticals significantly improved Shift4 sentiment over 2022, as new vertical volumes grew >4x during 2022.
- While net new wins in the high-growth core could still significantly contribute to 2023E E2E volume more than new verticals, that could change in 2024.
- FOUR has primarily served merchants within the U.S., but the company has called international expansion its #1 capital allocation and growth priority.
- The company started processing its first international volumes in Q4. The planned acquisition of Finaro is crucial to the company's global expansion. The deal should provide FOUR with a cross-border commerce platform with processing capabilities & licenses in Europe, Southeast Asia, and Japan.
- Price Action: FOUR shares traded lower by 2.21% at $67.63 on the last check Tuesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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